Osteoporotic bone loss causes significant morbidity and mortality in the aging population. Novel bone anabolic agents that stimulate osteoblast activity and bone formation are necessary for improved interventions in osteoporosis. Oxysterols are naturally occurring products of cholesterol oxidation with various biologic effects in vitro and in vivo. Our previous studies demonstrated that specific oxysterol combinations, namely 20(S)-hydroxycholesterol with either 22(R)- or 22(S)-hydroxycholesterol, induced the osteogenic differentiation of bone marrow stromal cells (MSC) in vitro, alone and in synergy with exogenous bone morphogenetic protein 2 (BMP2). In parallel, these osteogenic oxysterols inhibited the adipogenic differentiation of the same progenitor cells in vitro, induced Cbfal mRNA expression, and stimulated Cbfal and SMAD DNA binding. Moreover, the osteogenic oxysterols stimulated bone formation in mouse calvaria organ cultures ex vivo. Our proposed studies will test the hypothesis that osteogenic oxysterols induce novel pro-osteogenic and antiadipogenic effects on progenitor MSC by modulating molecular regulators of lineage-specific differentiation, by achieving the following Specific Aims: 1) Elucidate the mechanism(s) by which oxysterols induce the osteogenic and inhibit the adipogenic differentiation of progenitor MSC in vitro by examining their effects on known regulators of osteogenic differentiation, including, Cbfal, Osterix, SMAD, and Msx-2, and known regulators of adipogenic differentiation including C/EBPa, PPARy, and LXR;2) Examine the effects of oxysterols on osteogenic response of MSC to BMP2 by assessing their effects on osteogenic transcription factors, including Cbfal and SMAD and on their cooperative interactions, and on signal transduction molecules that mediate BMP2 signaling;and 3) Examine the effects of oxysterols on osteogenic and osteoclastic differentiation and bone formation in mouse calvaria ex vivo and in vivo, as determined by changes in bone formation measured by histomorphometry and micro-CT scanning. These studies should significantly enhance current knowledge of the mechanisms by which osteogenic oxysterols enhance MSC osteogenic differentiation and bone formation, and will provide important new information relevant to the potential use of these oxysterols for anabolic interventions in osteoporosis.